The report, "Accounting Education: Charting the Course through a Perilous Future," is a joint project of the American Accounting Association, American Institute of CPAs, Institute of Management Accountants, and the Big Five, and was written by W. Steve Albrecht, past president of the AAA and associate dean of the Marriott School of Management at Brigham Young University, and Robert Sack, emeritus professor of business administration at the University of Virginia. It has been much talked-about since it was published and presented to over 2,000 educators at the American Accounting Association annual conference in August.

 

The report's basic conclusion is harsh: "If we don't do something we're going to be out of business," Albrecht said.

 

Michael A. Diamond, past president of the AAA, agreed. "Accounting departments are no longer the crown jewel of business programs," he said. "These programs are nothing more than a service department."

 

The call for change is not new. Diamond cited studies since 1991 that warned the profession was "not attracting a sufficient number of students," that the "accounting education environment cries out for action" and the 150-hour rule is an "unyielding straightjacket."

 

The new, 72-page report discusses why the future of accounting education is in danger; how the business environment has changed and reactions to these changes; why accounting student enrollment has declined; "why accounting educators and practitioners would not major in accounting again"; and what needs to be done to improve accounting education.

 

Changes in the business environment, the report contends, are affecting the accounting industry. These changes include technology, globalization and "the concentration of power in certain market investors, primarily large mutual and pension funds," according to the report. These drivers of changes have resulted in inexpensive information and increased competition, which in turn have led to a slew of changes in the business environment, from the emergence of new companies and industries, to increased focus on customer satisfaction.

 

The reactions to these changes vary: The Big Five firms "have transformed themselves into completely different kinds of entities." Organizations such as the IMA now call management accountants "finance professionals," and accounting education has placed emphasis on faculty development.

 

But the reaction to these changes has been too slow, and the current supply of accounting students does not meet firms' hiring demands, the report says.

 

The reports notes that many college students choose their major based on starting salaries. Accounting starting salaries, though once competitive with other disciplines, now lag behind the competition. The solution, says the report, is to direct students to career opportunities that offer competitive salaries, which may mean educators stop sending their students to the Big Five.

 

"A cold, hard business fact," said Sack, is it "may be time to cut our close connection to the CPA firms. We have skewed the market because we have chased the Big Five."

 

Students are also willing to choose more risky majors these days. With a strong economy students are not as worried about changing jobs or careers. In turn, this may lead them to more attractive career alternatives, such as information systems and finance specialties. "Rip out all the pages from your textbook that don't have to do with technology," said Albrecht, "and you'll have a thin textbook."

 

The report blames misinformation and lack of information about accounting programs and careers for a decline in interest in accounting programs. According to the report, high school guidance counselors have outdated versions of what skills are needed to become an accountant. With globalization, accounting has become much more than "bean counting." Furthermore, high school accounting courses are either not offered or are boring, with too much emphasis on numbers and little focus on the interactive, hands-on activities accountants partake in every day.

 

"High schoolers don't see accountants," explained Albrecht, and therefore don't understand their role in the business world. This has resulted in fewer students at both the secondary and post-secondary levels taking interest in the profession.

 

The report seeks to end the question if the 150-hour rule is really to blame for the decline. According to the report, "it appears the 150-hour requirement has less to do with the decrease in accounting students than does beginning salaries or information." The problem is "with the kinds of requirements universities have implemented to fulfill the 150-hour programs." Enrollment is down due to the extra year of school, which has been implemented at an inappropriate time or in inappropriate ways.

 

Perhaps the researchers most enlightening discovery is that accounting majors, if given the opportunity to turn back time and re-select their major, would not choose accounting again.

 

Reasons vary: The CPA brand is not as affluent as before, accounting careers are not as financially attractive, and technology has eliminated much of the traditional work of accountants.

 

Practitioners also expressed their concern about today's accounting education model. Many feel programs are not preparing students for the new, emerging roles of accountants.

 

In a plenary session immediately following Albrecht and Sack's presentation at the Philadelphia AAA meeting, a room packed with educators and at-large members of the accounting community shared their thoughts. A professor from Alaska said he was disappointed that accounting programs were not fully embracing technology in the classroom. Another educator said it was time for faculty to "learn how to teach how to learn" to their students, addressing the concern that accounting programs are not attracting qualified students.

 

"It's not the AICPA's problem. It's not the AAA's problem. It's not the Big Five's problem. It's not just an academic problem. It's a professional problem," Albrecht told the crowd.

 

But despite this statement, Albrecht believes the two main obstacles to improving accounting education include society's poor image of accountants and the accounting profession, as well as accounting education's slow reaction to fix something that is steadily getting worse.

 

"Students don't like it when professors won't give them the answers," Sack said, and too many professors are teaching for positive evaluation forms. "It's hard to teach people to think. It's easier to teach rules." He then pointed out to young educators that they are the ones in the unique position to "take risks."

 

To reverse the steady decline and improve accounting education, the report suggests that every accounting department analyze its course content and curricula, pedagogy, faculty development and reward systems, strategic direction, skill development and technology.

 

"Corporate and public accounting firms are working hard to transform themselves into finance professionals and professional services firms," concludes the report. "It is now accounting education's turn to transform itself. Failure to do so could be fatal."

 

Potential and current accounting students may wonder why, after such a grim report, they should continue to pursue an accounting degree. As Sack simply said, "It is fundamentally the most comprehensive discipline that helps us understand the entity [of business] as a whole."

 

For the "Accounting Education: Charting the Course Through a Perilous Future" monograph, discussion forum, PowerPoint slides and chat session, go to the American Accounting Association Web site.

 

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